Is my landlord responsible for my stolen bike?

Written by Kathy Adams on . Posted in edited, For Renters, landlord tenant, Laws & Regulations, paid, renter's insurance, theft

When it comes to theft, it doesn’t matter if your bike is worth $100 or $1,000. If your bike gets stolen from your rental, your first reaction may be to blame the landlord. In most cases, however, the landlord isn’t liable, even if it was stolen from inside your apartment.

Your stuff, your responsibility (usually)

In most cases, you’re responsible for your personal property when it comes to your home.

This includes your bike, your computer, or anything else stolen during a break-in. The same also holds true for a bicycle kept outside, whether it’s on a patio or locked to an onsite bike rack.

Landlord responsibilities

In some cases, your landlord could be held responsible for a stolen bike if they didn’t provide sufficient security measures. It’s the landlord’s job to ensure basic safety measures to prevent criminal activity, but what that means, exactly, varies from region to region. Some cities may require that rental units have functioning deadbolts on doors and locks on ground-floor windows. Others may require ample lighting in common areas. Check your local and state laws to determine landlord responsibilities in your area.

Landlord ignores security issues

If you can prove your landlord ignored known security issues, such as broken window locks, you may have a case against them. Document all requests for security-related repairs or upgrades, as well as general repairs inside your rental unit, as they happen. These can help prove your case in the event of theft. Your landlord also must protect your belongings if a contractor works in your apartment while you’re away, for instance.

Don’t rush to sue

If the landlord failed to provide sufficient security or make security-based repairs in a timely fashion, you could sue for negligence. Before suing, however, make sure it’s worth your while. Legal costs could add up to more than your bike’s value in a hurry. Another option is to simply not renew your rental agreement.

Related: How to file a small claims lawsuit against your landlord or renter

The benefits of renters insurance

You can take an important step to protect your belongings—renters insurance. Renters insurance covers your bike and any other personal belongings stolen or damaged during a break-in. Better yet, it even covers your bike if it’s stolen off site, such as from your workplace. This insurance also covers items lost in a fire, for instance. It’s a great idea to purchase a policy, much as homeowners buy insurance to protect their personal property.

Related: The ultimate guide to renters insurance

Read the fine print first

As with other forms of insurance, renters insurance rates and the amounts of coverage vary from one policy or company to another. Some include limits on payouts per item stolen or damaged based on a percentage of total coverage. For instance, a policy from esurance pays full value of any item stolen or destroyed, as long as that single item is 10 percent or less of the total policy coverage. Some policies also don’t cover high-value items, typically worth thousands of dollars. Most insurance companies offer numerous package options, so it’s easy to pick a plan that meets your needs and budget.

Read your rental agreement

Read the original contract you signed when moving in, and find out exactly what you agreed to as far as security. For instance, if the agreement says buildings and common areas are secure, but several thefts happened recently, the landlord could be responsible. Some agreements explicitly state the landlord isn’t responsible for personal property, which means you should take steps to secure your own belongings.

How to test appliances before a tenant moves in

Written by Chris Deziel on . Posted in appliances, edited, For Landlords, landlord, Maintenance & Renovations, move-in, paid

Landlords don’t have to supply appliances, but most do. After all, appliances make rentals more attractive.

If you furnish appliances, you’ll want to make sure they’re in good working order. You probably also want tenants to be able to use them to make their lives more comfortable and enjoyable.

Appliances don’t last forever, so when you’re getting ready to welcome a new tenant, test appliances to make sure they’ll last. Like people, appliances get sick, and when they do, they display recognizable symptoms. Looking for these symptoms when you test appliances usually doesn’t require any tools.

Related:

4 basic amenities that attract quality tenants

How long should appliances last?

The dryer

The dryer is the appliance that can cause the worst problems because it can overheat and start a fire. According to FEMA, dryers cause 2,900 fires in the U.S annually. After making sure the vent and lint trap are clean, dry a load of clothing you’ve just run through the washing machine and conduct these simple tests:

  • Turn the dial to manual and make sure the dryer starts. Check for excessive vibrations or squeaks, which could mean the drum belt is loose.
  • Set the timer to 60 minutes or the drying cycle to “Normal,” time how long it takes for the dryer to shut off. It will be 60 minutes if the manual timer is working. The timing is variable for an electronic dryer, but it should be close to 60 minutes.
  • Take out the clothes and feel how dry they are. If they still feel wet, the vent line could need a deeper cleaning. If you’re sure the vent is clean, it’s time to call a pro to check the burner or heating element on the dryer.

The washing machine

Like dryers, washing machines often malfunction because something in the outlet hose is blocked. In this case, the outlet is inside the machine, and you may have to have it professionally removed. But first, you need to know it’s there.

  • Do a load of wash and make sure the machine drains properly.
  • This test might also reveal strange sounds that could indicate a loose belt or a problem with the motor.
  • Doing a load of wash also gives you an opportunity to test the controls. If you hear any sounds, the machine vibrates excessively, or the controls don’t work, call a service pro. Most problems are fixable.

The refrigerator

Refrigerators also have moving parts, but they may make noise when they malfunction, and since a refrigerator is always on, you can probably hear it. The sounds are a warning to call a repair pro or get a new fridge. The gaskets, fan, and refrigeration system itself are also important.

  • Open and close the doors to check the gasket seal. You should feel a slight pull on the door when it’s almost closed. Replace gaskets that are torn.
  • Put a thermometer inside the fridge and turn the control to mid-range. Come back in 12 hours and check the temperature. It should be 40 degrees Fahrenheit. If it isn’t, turn the control to cold and check again in another 12 hours. Suspect a problem with the refrigerant if the temperature doesn’t reach 40 F.
  • Look for water on the ground or in the refrigerator compartment. It can indicate problems with the refrigerant or the controls.

The water heater

  • Turn on the hot water at every faucet and check the temperature.
  • Take a careful look at the color of the water. Cooler-than-expected water or a yellow or brownish tinge point to sediment and rust in the water heater.
  • Get it flushed before tenants move in to avoid water quality problems and premature water heater failure.

Related: The ultimate guide to “normal wear and tear”

The kitchen stove

The kitchen stove is probably the easiest to test.

  • Turn on each burner or heating element in turn and make sure it provides maximum flame or glow when the control is turned up all the way.
  • Set the oven to cooking temperature–about 400 degrees—and place an oven thermometer inside. Wait for it to reach the target temperature.

The other stove features are optional. They don’t have to work as long as you disclose that fact to the tenants.

Look for gas leaks

As you test appliances, be sure to listen for leaks coming from those that use gas. It’s a good idea to do a bubble test on each gas connection.

  • Make a 50-50 solution of dish soap and water and spray some on each connection.
  • If you see bubbles on any connection, tighten the connection.
  • If you can’t stop the bubbles, get a licensed gas technician to service the connection.

Check the lights, plugs, and smoke detectors

An outlet tester will come in handy. Plug it into each outlet to check for power.

  • Test GFCI outlets by pressing the bottom button on each one and verifying that the power goes off, and then press the reset button on the top to make sure the tester lights up again.
  • Turn on each of the lights to check for burnt-out bulbs.
  • Press the test button on each of the smoke detectors to make sure the alarm sounds.

Related: The long and short of smoke alarms

Give yourself time

As you test appliances, you may find problems that require professional repair. Give yourself time to make these repairs by conducting the tests at least a week before occupancy. That way, everything will be shipshape when tenants move in, and if anything goes wrong, it won’t be your fault.

When to sell a rental property

Written by Laura Agadoni on . Posted in edited, For Landlords, Income Ideas, paid

I often hear people talk about the day they’ll sell their rental property.

That’s a big assumption. There’s no law that says you must sell a rental property someday. You can hold onto rental property throughout your retirement years if it’s bringing positive cash flow.

But there are legitimate reasons to sell a rental property. So how do you determine the reasons and timing?

You want to cash in

Guessing the market is one strategy—buy low, sell high. This is a favorite strategy of house flippers who traditionally sell after holding the house a year or less. House flippers are typically not buying property to use as rental property. That’s usually Plan B if the house won’t sell. But some flippers have a five-year plan, where they hold a property for five years or so, making improvements gradually while collecting rent. Then when the house is sufficiently upgraded and if prices have risen in the area, they sell.

The property isn’t performing well

The best way to determine whether your rental property is doing well is by cash flow. Are you making or losing money each month? Determine this by taking your rental income and subtracting all your expenses associated with the property, including a mortgage payment. If you’re losing money, you might want to sell.

But first consider whether you can tweak the numbers so that you will have a positive cash flow. Do an analysis of what similar rental properties charge for rent in your area. You can save yourself some research time by getting a Rent Estimate report in Cozy. If you find you can get more for your rental than what you’re currently charging, consider raising the rent as soon as you can and keep the property.

For a more in-depth look at number crunching, check out this blog post. (I’ve interviewed this author many times, and he knows his stuff.)

You’re not cut out for the job/you’re just over it

Some people like the idea of renting property, but they let their emotions get in the way. They may become friends with their tenants, for example. If that happens, they don’t make the best business decisions. They may let tenants make late rent payments, for example, or they may waive their right to make periodic inspections because they feel awkward doing so. Landlords like this, may find—as what happened to me with my first rental—that their tenants have become way behind on rent and have damaged the place beyond repair. If that happens, it could be time to sell—either that or hire a property manager.

Related: The temptation of being friends with your tenants

You’re moving

If you manage your own rental properties, it’s easier to do so when you live nearby so that you can pop over when it’s time to inspect and maintain the property or to make or arrange repairs. If you want or need to move, you can keep your rental property and manage it from afar. You’ll probably need to hire a property manager, though. Another option would be to sell, especially if you’re moving to a favorable spot for rental property investment. You can buy another property in the new location.

Related: Should I invest in local or long-distance rental properties?

You want to trade it for something else

The rental property you own might be due for some major repairs, such as a new roof or HVAC system. You might want to sell rather than shell out a lot of money to replace big-ticket items. Or you might have bought an inexpensive property, but now you want to buy a nicer property and collect higher rents. If you decide to trade up, consider doing a 1031 exchange to postpone paying tax on any income gain your receive through the sale.

Related: The complete guide to 1031 exchanges

It’s time based on your plan

You might have bought rental property knowing that an event would trigger its sale. This could be sending a child to college, buying your dream home, or getting ready to retire. A death in the family or a job layoff are other reasons you might want to sell your rental property. But don’t make rush decisions. You might wish to meet with a financial advisor during emotional times in your life. It might make more sense, for example, to hold the property if it’s a good income stream for you.

The bottom line

If you decide it’s time to sell a rental property, you can feel better about your decision if you have a solid reason. Note that you can sell your rental property at any time, even with tenants in it. Just make sure you are doing so correctly.

Related: Tenant’s rights when selling an occupied rental property

Tenant move-out letter plus 2 other free templates

Written by Laura Agadoni on . Posted in edited, For Landlords, Landlord Tips, Leases & Legal, Move-in/Move-out, paid, Rent & Expenses, Security Deposits, Step 12 - Move-Out

Your goal as a landlord is not only to have tenants but to keep tenants (the good ones anyway) as long as possible. But no matter how wonderful you are as a landlord, and how great your rental may be, there usually comes a time when your tenant needs to move.

When your tenant plans to move, you should make the move-out process as smooth as possible. This benefits you and your tenant—when your tenant knows what to expect, they’re more likely to meet your expectations. Here are some templates you can use when your tenants’ leases are about to end.

The lease renewal letter

If you want your tenant to sign a new lease, contact them about two months before the current lease is due to end. The purpose of the lease renewal letter is to find out what their intentions are and to explain what they need to do if they wish to continue to live in your rental.

Tip: This is the time to raise the rent if you intend to.

Related: How to raise the rent in 4 easy steps [free template]

Related: Should I increase rental rates every year?

Note: If you do nothing after the lease ends, and your tenant stays, your tenant becomes a month-to-month tenant.

Lease renewal letter template

Note: You don’t have to increase the rent. If you don’t want to, change that section to reflect the rent will remain the same.

2. The move-out letter

If your tenant decides not to renew and wishes to move, send them a move-out letter about a month before the lease ends. The purpose is to give instructions on what you expect of your tenant.

Move-out letter template

Note: This letter contains language about lease requirements. Make sure yours does as well before you include that.

3. Notice to pay rent or quit

If your current tenant missed a rent payment (or two), you probably shouldn’t invite them to renew the lease. In fact, you should send them a letter asking them to pay the rent ASAP or leave.

Notice to pay rent or quit template

Once you rent your property, you will hopefully have wonderful tenants who stay a long time. But since that isn’t always the case, you can still make things easier for everyone involved if you are proactive with your tenants by letting them know what the expectations are during move-out time.

Am I responsible for the damage my guests or pets cause?

Written by Kathy Adams on . Posted in edited, For Renters, guests, Laws & Regulations, Leases & Legal, paid, property damage, renter's insurance, Step 10 - Repair & Maintain

You’ve invited a few guests over for a barbecue on the patio. Your pal Mr. Grillmaster, the self-proclaimed expert on charcoal grills, takes over lighting the grill and handling burger duty. A few squirts of lighter fluid later and the flames soar, which damages the exterior wall. So who’s responsible?

It’s your responsibility…

Even though you didn’t cause the damage, you will be held liable for it by either the landlord, their insurance company, or your rental-insurance company. You, as the tenant named on the lease, are responsible for damage caused by your household members, guests, and pets. Many rental agreements detail this information, so there’s no question about it.

…even if you weren’t home

It doesn’t matter how or when the damage happened—you’re still responsible. If you allow friends to stay in your place while you’re away and one of them causes a sink to overflow, damaging the floor or even an apartment beneath yours, you’re liable.

Your landlord expects you to pay for repairs to your unit and any other damaged property.

Dealing with renter’s insurance

If you have renter’s insurance, submit the landlord’s repair bill to the company, but don’t expect them to cover all damages. Renter’s insurance covers your own personal property, such as computers and clothing, but might not cover damage to your rental unit.

Renter’s insurance that includes liability coverage pays for damages to other people’s personal property, such as electronics in the unit beneath yours. As with other forms of insurance, the amount and type of coverage varies by policy. Read the fine print or call your agent to determine whether your policy covers damage to the building.

Related: A landlord’s guide to renters insurance

Shouldn’t my guest pay?

If your guest breaks a window, you can’t expect the landlord to send the bill to that guest. You’re legally responsible for the actions of the guest. You could ask the guest to pay the bill, but as far as the landlord is concerned, you’re the one ultimately responsible.

Burglary damage

If a burglar breaks in, you might not have to pay for damages to the unit. To help prove your case, file a police report right away and provide all pertinent information to the landlord. Read the lease terms to ensure you aren’t liable for such damages. Some contracts might shift such responsibilities to the tenants. Check local and state laws regarding this issue if your landlord refuses to pay for repairs.

Pet problems

Even if your landlord welcomes dogs, you could get stuck with a bill if the dog breaks a screen door, for example, when scared by lightning. Your renter’s insurance might cover pet-related damage, but keep in mind the cost of your deductible versus the cost of the repair bill. If you make an insurance claim, your premiums may also rise. It may be better in the long run to just pay for the repairs out of pocket.

Related: Landlord liability when a tenant’s dog bites someone

Ultimately, you’re responsible for everything that takes place in your home, just as if you owned the property. Keep that in mind before planning a wild party or adopting a large dog that might make a mess of the place in a hurry.

 

9 maintenance issues tenants are responsible for

Written by Chris Deziel on . Posted in edited, For Landlords, For Renters, landlord tenant, Maintenance & Renovations, paid, rental maintenance

Maintaining a clean, safe, and livable rental property is a shared commitment. The law requires a landlord to provide a safe and habitable residence, but it won’t stay that way for long unless tenants share upkeep responsibilities.

Landlords can’t control how tenants live, but they have a right to expect proper use of their properties. Some commonsense tasks, such as proper disposal of trash, need no explanation. Other maintenance issues should be specified in the lease so everyone is on the same page.

1. Waste disposal

You have to throw away the trash if you want a clean and sanitary home. Most municipalities provide waste disposal services for which they generally charge a fee. Landlords often pass this fee on via a lease clause or include it in the rent. In places without regular trash service, it’s important to negotiate a disposal strategy and stick with it.

Related: How to handle dirty tenants

2. Pest control

It’s up to the landlord to ensure that a rental is pest-free before anyone moves in. Once the place is occupied, though, tenants automatically assume some of the responsibility for keeping it that way. If the landlord has corrected structural problems that allow rodents and insects to enter, tenants should avoid attracting them with poor hygienic practices. Tenants could be financially liable for abatement of an infestation caused by negligence, especially if they violate provisions specified in the lease.

Related: Best pest control and prevention tips for your rental property

How to deal with bed bugs at your rental property

3. Landscaping

Lawn and yard maintenance can fall to the tenant if a lease clause assigns these tasks. In that case, any violation of city or county ordinances would be the tenant’s responsibility. The tenant is always responsible for keeping the yard safe by removing obstacles and generally cleaning up. In certain situations, particularly in shared housing units, a landlord may contract a tenant to do yard maintenance in exchange for compensation.

Related: Should a tenant be paid for doing yard work?

4. Snow removal

Snow removal is a matter of safety, not only for tenants but for anyone using a public walkway that crosses the property. Some municipalities assess fines for failure to remove snow in a timely fashion. Able-bodied tenants are in the best position to handle this job, but it isn’t their responsibility unless the lease specifies it. However, because tenants have a responsibility to keep the premises safe, they could be faulted for failing to clear snow from doorways and walkways that access them.

Related: Snow removal—how to avoid being negligent

5. Mold prevention

Mold grows where there’s moisture, and the question of whose job it is to prevent it—and clean it up—can be a thorny one. In general, it’s the landlord’s job if the moisture comes from a plumbing or building leak. Liability for cleanup may fall to tenants if the mold is the result of poor hygiene practices, such as leaving piles of damp clothing in the corner. Tenants are also responsible for providing adequate ventilation and could be required to clean surface mold on furniture and bathroom walls.

Related: Is a landlord always responsible for mold remediation?

6. Proper appliance use

Appliances, such as stoves, microwaves, and dryers, won’t last long under abuse. Proper appliance use is a must in any living situation, and if any repair or replacement is clearly the result of negligence on the part of tenants, they may have to foot the bill. Landlords are typically responsible for routine maintenance, such as filter replacement or duct cleaning. This could be addressed in the lease.

Related: How long should appliances last?

7. Smoke detector maintenance

Smoke detectors are generally unnoticeable until they need new batteries or they go off, which hopefully never happens. When a smoke alarm needs new batteries, it’s the landlord’s job to replace them, unless the lease says otherwise. It’s up to tenants to avoid false alarms caused by shower steam or cooking smoke, but if an alarm goes off for no reason, they must notify the landlord as soon as possible so it can be fixed or replaced.

Related: The long and short of smoke alarms

8. Septic maintenance

Improper use of a septic system can seriously shorten its life. This is such an important maintenance issue that most landlords include a lease clause or provide a handout that describes best practices. They include treating oils, greases, and non-degradable substances as trash and not plumbing waste. Septic treatments, tank pumping, and pump maintenance are the landlord’s responsibility, but if the system fails, tenants could be dinged if negligent use is the cause.

Related: How to educate your tenants about using a septic system

9. Contacting the landlord

It’s illegal for a landlord to make tenants responsible for all repairs. Tenants do have a responsibility, however, to contact the landlord or property manager when the property needs repairs. Any damage that results from a failure to do so could cost all or part of the security deposit or more. Unless authorized by the lease, tenants can’t make repairs on their own unless the landlord does not respond. In that case, most states allow tenants to make repairs that affect habitability and charge the landlord.

Understand the lease requirements

When it comes to maintenance issues for tenants, it’s important to read and understand the lease before signing it. Certain clauses may stipulate maintenance tasks that don’t normally fall to tenants, and once they sign on the dotted line, tenants own these tasks. Encourage your tenants to take the lease home and study it carefully before signing.

Do I have to pay rent if I lose my job?

Written by Laura Agadoni on . Posted in edited, For Renters, Leases & Legal, paid, Rent & Expenses

The short answer is YES! If you’re in financial trouble and can’t pay all your bills, make sure you pay rent. Otherwise, you can be evicted.

Many people think they can get away with letting the rent slide when finances are tough. This is especially true when renters are in a mom-and-pop type of landlord situation (as opposed to a huge management company).

Not paying rent is one of the worst financial decisions you can make.

Just because you have a mom-and-pop landlord doesn’t mean you’re actually dealing with your mom or dad. Maybe you could get away with not paying money owed to your parents, but you shouldn’t take that risk with your landlord. If you do, you could be out on the streets.

You could be evicted

Not only could you be evicted for not paying rent, an eviction goes on your personal record. When you try to rent another place, the new landlord or property manager will look at your background check and see that you’ve been evicted. And that will make it difficult for you to rent another place.

Prioritize your payments

It’s never good to skip paying a bill, but if you’re in financial trouble because of a job loss or other reason, prioritize which bills you should pay first.

Your top priorities are survival needs: food, medical, and shelter. Make sure you stay healthy and have a roof over your head. Pay for your basic needs first.

It’s better to skip your credit card payment than your rent.

Next in line: pay utilities, your car payment, and legal obligations such as child support and taxes.

After you’ve paid all the above, pay your unsecured debt, such as credit card debt.

Communication is key

When you know you won’t be able to pay all your bills, call your creditors and explain the situation. You might be able to work out a payment plan that you can afford. Some creditors might agree to take a lump sum payment—for less than what you owe—as a settlement. This lessens your bill and eliminates your monthly payments.

Talk with your landlord

Let your landlord know right away if you can’t pay rent. Don’t bury your head in the sand, hoping the situation go away. And don’t keep this information from your landlord, in the hopes they won’t notice—they will.

Besides, if you’re up front with your landlord right away, they might work with you on a solution. They might let you pay rent late one time, for example. Or they might discount your rent moving forward if you do some work in return.

Related: 5 things to do when a tenant stops paying rent

Note: Most landlords are more likely to work with you if you’ve always paid the rent on time, before you lost your job (or whatever financial difficulty has come up), and if you followed all other lease terms.

Keep in mind that your landlord doesn’t have to agree to any arrangement other than what’s in the lease. Your landlord has their own bills to pay.

But it’s a good idea to ask if you can work something out if you find yourself in financial difficulty. Whether you think your landlord will agree to a special arrangement or not, let your landlord know about major changes in your life that affect your ability to pay rent, rather than just skipping out on rent payments.

Note: In general, big management companies are less likely to be flexible with rent payments than independent landlords.

Figure out a game plan

Look at your income and expenses. Maybe not being able to pay rent will only be a one-time incident. But if it looks as though you won’t be able to afford your rent payment moving forward, discuss options with your landlord. They might let you out of your lease, for example, if you agree to leave quickly.

Every situation is different, so discuss your particular case with your landlord.

Discuss your personal situation with your landlord.

What to do if you’re in financial trouble

Here are some measures you can take to help you get back on your feet:

  • File for and collect unemployment if you lost your job.
  • Ask about a hardship program. Call the customer service department for your credit card or loan, and ask about a hardship program that can help you pay your bill. These programs can help in various ways, such as lowering your monthly payment. In many cases, if you enter into a hardship program with your credit card issuer, they won’t report you to the credit bureaus (if you complete the program).
  • Go to your city or county government website for assistance programs. You will often find grants offered by charities, churches, and the government to help with your bills and rent.
  • Get counseling on how to budget. You can find reputable counselors from your local government website.
  • Ask your family or friends for help.

The bottom line

It’s tough to lose your job and then have problems paying your bills. But rent is not an expense you can skip out on. Don’t risk losing your home. Many landlords, if they can financially afford to, will try to come up with a plan that both of you can live with.

Staple supplies for landlords to keep on hand

Written by Chris Deziel on . Posted in edited, For Landlords, landlord, Landlord Tips, Maintenance & Renovations, paid, painting, rental maintenance

If you’re a landlord who wants to run a tight ship, you need certain supplies on hand to deal with common situations.

These supplies include tools and maintenance items, paperwork to make your life easier, spare keys, and a way to remove unauthorized padlocks and chains.

Tools and supplies for basic maintenance

Your toolbox should include the basics:

  • Hammer
  • Saw
  • Tape measure
  • Screwdriver
  • Power drill

For small electrical repairs:

  • Multimeter
  • Wire splicing tool
  • Utility knife

For plumbing repairs:

  • Two pairs of locking pliers (One pair is for holding the pipe while you tighten a leaking fitting with the other.)

Besides tools, you’ll need a few supplies to complete repairs. If you keep an inventory of a few basics, you can complete simple repairs efficiently without repeated trips to the hardware store. The list isn’t long. It includes:

  • An assortment of screws and other fasteners
  • Wall anchors
  • Electrical tape, duct tape, and plumbing tape
  • Carpenter’s glue and 2-part epoxy

Related: A landlord’s toolbox for appliance repair and maintenance

Supplies for painting and cosmetic maintenance

When a tenant moves out, you almost always have to do some painting to make the rental ready for a new tenant. Keep the following in your paint closet:

  • Touch-up paint
  • Brushes
  • Rollers

The painting job inevitably involves a certain amount of wall repair. So it’s a good idea to also keep the following supplies in your paint closet so you can make these repairs quickly and minimize downtime for the rental:

  • Drywall joint compound
  • Drywall tape
  • Spackling compound
  • Patching compound
  • A four-inch putty knife and a 6- and 10-inch drywall knife
  • A paint scraper

Related: The top skill you should perfect: painting

Cleaning tools and supplies

Cleaning is an important part of the turnaround process, so your supply closet should include the following:

  • Mop
  • Assortment of rags and sponges
  • Bucket
  • Vacuum cleaner
  • Spray bottle that you can fill with vinegar (comes in handy for cleaning hard water streaks from the bathroom walls and shower door)
  • Squeegee

In addition, it’s a great idea to keep the following supplies in the cleaning closet:

  • Ammonia
  • Bleach-based cleanser
  • Dish soap for delicate cleaning jobs
  • Enzyme-based drain cleaner for slow drains
  • Scouring powder
  • Vinegar and/or hydrogen peroxide for disinfecting
  • Window cleaning fluid

Related: How to get your security deposit back

Paperwork to keep in your file cabinet

Your file cabinet should include the instruction manual for each of your appliances, as well as a copy of the warranty (if it’s still in effect). Besides these, it’s a good idea to keep the following paperwork:

  • Copies of lead paint and other disclosure forms that you are required to supply to new tenants
  • Fact sheets about the rental that include safety information and important phone numbers that you can supply to tenants
  • Ready-to-fill-out leases and/or rental agreements.

Related: Find a rock-solid rental lease and stick to it

Prepare for lockouts

It’s good practice to limit the number of keys you give out, and it’s an even better practice to have at least one spare set for each rental. Keep the keys in a place you can access quickly, and a late night emergency call from a tenant who has misplaced keys will be less of a bother.

Tenants who lose keys sometimes use their own locks to keep doors and other parts of a rental unit secure. It isn’t unheard of for these unauthorized locks to remain when the tenants vacate the premises. Keep a pair of bolt cutters in your toolbox, and you can remove them.

Related: 4 considerations when choosing locks for your rental properties

Consolidate all your supplies in one place

Not all landlords do all their own maintenance and repairs, but if you do, consider investing in an inexpensive used vehicle in which to keep supplies (except paperwork). This is a great idea if you have multiple units. You’ll always have the things you need right at hand, and you won’t have the hassle of organizing materials each time a job arises. You’ll save time and money, and every little bit helps to keep your rental operation in the black.

What are your residential mortgage options when buying a rental?

Written by Sarah Block on . Posted in edited, Income Ideas, Mortgages & Loans, paid

Recently, I went down a residential mortgage rabbit hole.

I’ve been considering buying a vacation rental. With dreams of beachfront cottages and wooded cabins, I went online to research financing options. There were so many. True to myself, I obsessively researched it until the idea of a vacation rental gave me chills.

The amount of money we would have needed for a loan was too low for a traditional mortgage. I wasn’t aware that mortgages had minimums. I also wasn’t aware of the myriad of other stipulations with investment mortgages.

Securing financing for an investment property is more difficult than for your primary home. You need to prove that you can not only afford your mortgage but, if the property isn’t rented, you can afford the second mortgage as well. In addition, the down payment needs to be higher than with your home at a minimum of 20%. No small feat.

Here are the seven mortgage options for investment properties.

7 investment property mortgage options

1. Hard money loans

Hard money loans can be approved quickly and without too many hoops to jump, but they come at a risk. They are funded by investors who provide the loan based on the property and collateral. Hard money lenders generally lend with collateral to back up the landlord’s ability to pay. The loans are short-term (less than five years) and have high interest rates.

Pros: These loans can be funded quickly with fewer requirements than traditional loans. They are used mostly for fix-and-flip investors who will have the property for less than a year, sell it, and pay it off.

Cons: Hard money loans are expensive with high interest rates and origination fees. If your flip doesn’t work out as planned, a hard money loan could get very expensive and you risk losing your collateral.

Related: Top 10 reasons real estate investors use hard money loans

2. Conventional loans

Conventional loans are slightly less risky than other options; however, you need to be financially secure to be approved for an investment property. Loan requirements are more strict than with a primary home, and more money is needed up-front.

Pros: A conventional loan will have a better interest rate than a hard money loan. You can have a 30-year loan, so if you plan on keeping the property as a long-term rental, you have time to pay it off. Last, it’s backed by a bank, making the loan more secure.

Cons: The loan requirements are difficult to meet. Mortgage insurance is not available for second homes or investment properties, so a minimum of 20% needs to be put down on the property. In addition, if you need rental income to meet the debt-to-income ratio, you will have needed two years or more of property management experience (with a Freddie Mac backed loan). Last, the interest rate is higher on a second home.

Related: Pros and cons of making extra payments on your mortgage

3. HELOC

A HELOC—home equity line of credit—is when an investor takes equity out of their primary residence as a line of credit to purchase another property. You can use this line of credit for five to 10 years, depending on your lender, and you have 10 to 20 years to pay it off.

Pros: Using a HELOC loan for buying an investment property has a quick approval process, and you have a long period to pay it back.

Cons: The issue with HELOCs is that you are taking equity from your primary residence to buy an investment, and that is always a risk. The interest rate can vary, just like with a credit card, so payments will not be the same every year. If you are a Dave Ramsey fan, you know that he would say using a HELOC to buy an investment property is “dumb.” If you do not pay close attention to your finances, using a HELOC can be risky and your debt can get out of control.

Related:  6 ways to buy your first investment property for $1,000 or less

4. FHA loan

Many first time homebuyers know FHA loans well. They are federally backed loans that require only a 3.5% interest rate and a less restrictive approval process. For example, you can use a gift as a down payment. However, they come with extra stipulations, such as not using the home as a rental property.  So, why is it on this list?

Pros: FHA loans have low-interest rates, have extra funding available for renovations, and are less restrictive on the down payment.

Cons: You need to occupy the residence. That’s a big con. An FHA loan cannot be used for an investment property. However, it can be used for multi-unit properties. You can use an FHA loan to finance a three-flat, live in one unit, and rent the other two. That’s exactly how I financed my investment property.

5. VA loan

Veteran loans started in 1944 with the G.I. Bill of Rights. A VA loan is a home loan with no down payment. VA loans are available to vets whose service met a certain requirement. Like, FHA loans, VA loans cannot directly be used for investment properties, but there is a way around that.

Pros: VA loans can be used on properties with up to four units. If you want to use a VA loan to finance a rental property, you must occupy one of the units. The benefits of VA loans are no down payment, no PMI, eased debt-to-income requirements, and they are flexible.

Cons: There is a VA funding fee that is used to continue funding the VA loan program. You cannot buy a rental property that you do not occupy. It is difficult to qualify.

6. Cash-out refinance

A cash-out refinance is when you leverage the equity of a property you already own to purchase another. Let’s say your primary residence has $100,000 of equity in it. As long as you leave 20% equity in the property, you can refinance and take the cash out to invest in another property.

Pros: If your property has the equity, it is a quick process to get approved. You pay the interest rate of your primary residence, avoiding the high interest that comes with an investment property.

Cons: You start your mortgage over again. You might end up with a higher interest rate on your primary home than before. Without enough cash in your reserves, you might not be able to qualify for a refinance.

7. Seller financing

Seller financing, also known as private money mortgage, is financing supplied by the seller of the property. The financing can be for the down payment, whole mortgage, or both. Seller financing is popular among property investors and can benefit both the buyer and seller. Sellers can finance in two ways.

1) The buyer signs a contract to pay off the loan over a certain period of time, and the seller provides a deed of trust that lets them foreclose on the buyer if the buyer fails to pay, but also gives the buyer the right to sell. 2) The second option is a land contract where the seller keeps the deed until the loan is paid off. This option is less popular than the first because the buyer does not have the right to sell or refinance until the loan is paid off.

Pros: The approval process is fast. The closing fees are low. Down payment is flexible. The seller has pros as well. A motivated seller can finance the sale of their property. They have fewer tax implications. The promissory note can be sold to another investor if they need cash. The property can be sold “as-is” easier.

Cons: The seller needs to have the mortgage free and clear for a seller financing option to work. The interest rate is usually higher than with a standard loan. The seller needs to be willing to take the risk of holding a loan. Not all sellers will want to be responsible for financing.

Related: How to do a seller-financing deal

Conclusion

There are many ways to finance an investment property, but they each option has its quirks. When making an investment, look at all your options for financing. Making the wrong decision can cause you to go broke, but making the right decision can make you rich.

After my trip down the rabbit hole, I have an idea of which route is best for me. What’s right for your investment strategy?

Top 8 ways to know if your rental meets safety standards

Written by Chris Deziel on . Posted in edited, For Landlords, landlord liability, Maintenance & Renovations, paid, safety, Step 10 - Repair & Maintain

The most successful landlords understand the importance and value of conducting regular property inspections. Making sure your rental meets the safety standards mandated by statutes (and common sense) is the best way protect your tenants and your bank account.

Make a checklist for each property you own, and update it when you inspect the property. Include these eight important items on your list.

1. Do you have GFI outlets?

The National Electrical Code began to require Ground Fault Interrupting outlets (GFIs) in 1971, and, over the years, it expanded the list of locations where GFIs should be installed. These include:

  • Kitchens
  • Bathrooms
  • Laundry rooms
  • Anywhere outside

Many older rentals don’t have these safety devices, and that increases the risk of shocks and fires. If a non-GFI outlet were to overheat and catch fire in a place in which a GFI is required, insurance might not cover the damage.

You don’t necessarily have to retrofit all non-GFI outlets in a kitchen or bathroom. You could simply install a GFI breaker in the main panel, or you can locate the first outlet on the circuit and replace that one with a GFI. If it’s properly wired, it will protect all downline outlets by tripping whenever one of them detects a ground fault.

Related: How to get your landlord to fix a bad electrical system

2. Are there smoke detectors?

Most states have smoke alarm laws, so it’s a good idea to become familiar with those in your state or municipality and obey them. State or local regulations usually specify where the smoke detectors should be, and naturally, most fire prevention authorities require the smoke detectors to be in working order.

Check the smoke alarms in your rentals yearly by pushing the test button on each one and ensuring that the alarm sounds. Respond promptly when a renter complains of chirping noises because that means the battery is weak and the smoke alarm may not function in an emergency.

As of March, 2018, 27 states require carbon monoxide detectors in residential units through statute, and another 11 states require them through the state building code. To avoid having to keep track of both smoke and carbon monoxide detectors, consider installing combination units. These come with sealed batteries to fire code requirements in California and elsewhere.

Related: The long and short of smoke alarms

3. Are the outdoor railings safe?

If your rental has a deck or balcony, the railings need to be at least 36-42 inches high, depending on whether the local governing authority relies on the International Residential Code or the International Building Code. The railings must be able to withstand a minimum shear force, which is also specified by code.

Wood railings tend to deteriorate over the years. The wood rots, and the bolts holding the posts to the deck fascia work themselves loose. Check the railings on your decks and balconies every year. Tighten loose fasteners and replace rotting wood.

4. How safe are your stairs?

You don’t want renters, visitors, or anyone else to slip and fall on any of your stairways or walkways. You can’t prevent every accident, but you can minimize the risk of one occurring by keeping stairs in good repair.

Replace rotted wood on wooden staircases and fix cracks on concrete ones before they widen and turn into hazards. Painting stairs and walkways with a non-slip coating is a good way to guard against loss of traction in wet weather.

5. Do the doors lock?

Most states require landlords to provide secure housing, and courts are increasingly awarding large settlements to tenants who sue landlords after burglaries or break-ins.

A secure exterior door is one with both a locking lockset and a deadbolt. Re-key the locks or change them with every turnover to eliminate the circulation of spare keys. Even better, equip the doors with electronic or combination locks. Discourage renters from duplicating keys, and keep a log of the keys that you hand out.

In high-crime areas, installing an alarm system is an added precaution that could prevent a burglary and keep you out of court.

Related:

4 considerations when choosing locks for your rental properties

Should landlords (or tenants) install an alarm system?

6. Is that paint safe?

You should be concerned about lead-based paint if you have a rental that was built before 1978. Before that date, lead was a common ingredient in interior paints, and paint containing this toxic metal may be flaking off your old wooden windowsills right now. If your renters have children, and the children ingest lead-based paint, they could suffer developmental and neurological problems.

It’s in your interest, as well as the interest of your renters, to test painted walls and woodwork for lead. If you get a positive reading, consult a remediation expert to determine the best way to deal with it. According to federal law, you must disclose the presence of lead paint to your renters.

Related: Understanding “the lead disclosure rule”

7. Is there a pest infestation?

Besides being a general nuisance, pests such as mice, rats, and cockroaches are unsanitary and can spread disease and generally lower safety standards in the rental. Renters may attract them by leaving food around or failing to clean up, but it’s ultimately the landlord’s responsibility to get rid of them. If you add a monthly payment to a local pest control company to the rent, you won’t have to worry about this problem.

8. Are the appliances maintained?

The dryer: This tops the list of appliances that need an inspection and possible maintenance at least once a year. For the sake of fire safety and dryer performance, check the lint trap and the vent opening in the side of the house for lint buildup. Clean the vent if you can’t feel a steady stream of air from the vent opening when the dryer is on.

The washing machine: Check the lint trap on the washing machine.

The water heater: Check for leaks. You should flush the water heater every three to five years to prevent leaks and maintain its performance.

Related: How long should appliances last?

Mention known issues in the lease

You may not be able to correct all the issues that lower safety standards in your rental as quickly as you’d like. It’s important to get to them eventually, but until you do, disclose them in the lease as the law requires. That isn’t guaranteed to get you out of hot water if an accident occurs, but at least you’ll be following the law, and you won’t be misrepresenting the rental.

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